Brexit uncertainty still reigns as the City prepares for the worst

Theresa May managed to cling on as the Brexit bus swerved off course but British business is now preparing for the worst.

A red London bus and black taxi cab pass through central London. Picture: AFP

British Prime Minister, the indefatigable Theresa May, has survived a vote of no confidence in her as leader. But as with everything Brexit, the vote tally, 200 in favour and 117 against is just one more polemic. As one BBC commentator put it, this vote has just been a chaotic detour, the car has gone off the road, through a barn with lots of chickens flying out, but she’s back on the same road with the same cars chasing her.

“Nothing has changed!” as Theresa May continually says. Yet it has changed. One third of the Tory parliamentary party has no faith in her. In more normal times that would mean resignation and no surprise that the Brexiteer who had pushed for the vote, Jacob Rees-Mogg, immediately called for her to visit the Queen and throw in the towel.

But she will not. Perhaps in part it is her determination, or rather stubbornness, to have the legacy of delivering Brexit. If anyone was in any doubt about the cruelty of the British tabloids, Thursday morning’s warped depiction of the Prime Minister in the Daily Star as “May: the Klingon prime minister” confirms it.

But is it also the maths of the UK parliament that means she has no majority without the Northern Irish DUP and, given the alternative is a Corbyn government, she can indeed cling on.

Copies of the Evening Standard on the front cover following the confidence vote in central London. Picture: AFP

The confidence vote means that Theresa May cannot now be challenged from within for another 12 months. How many votes she won back by promising not to stand for PM at the next election is unknown (as is whether she would not stand if an election was called in the next few months).

What has changed is that the odds of a second referendum have now increased. Consider this: Theresa May has taken a big knock. She is off to Brussels to ask for more concessions than warm words around the Irish Backstop, whatever that means — a legal codicil? Something else? We have heard from EU chiefs Donald Tusk and Jean-Claude Juncker that there will be no renegotiation of the Irish backstop, no meaningful concessions. Without those concessions, would Mrs May then threaten her recalcitrant Brexiteers to fall in line or face an even softer Brexit deal, one which might bring her support from across the floor from Labour?

Most backbenchers believe she will lose the parliamentary vote she postponed this week to January 21. What will Mrs May do then? One obvious option for her is to try to put her deal to the country via a second referendum with the question being “Her Deal” or “Remain”. It would mean a “No Deal” would be off the ballot paper. If that happened, ironically, many folk who voted for Brexit might well vote to remain on the grounds that it is a better deal for Britain. This is exactly what staunch Remainers like former minister Anna Soubry have been hoping.

 

Yet the British parliament may also have other ideas about the wording of a second referendum question and you can bet the placard-holders in London’s winter streets will too.

A No Deal, in other words crashing out of Europe and relying on WTO trading rules, is a real possibility, as is a call to delay the Brexit withdrawal date of March 29. Business in Britain is as confused as the rest of us. The City itself is preparing for the downside scenario, not of a No Deal — that would be bad enough — but of a Corbyn high-spending, high-taxing nationalising Labour government — far worse. We wait for the next painful development when Mrs May returns from Brussels with a brightly wrapped Christmas present full of the proverbial.